Man gets 90 years for bilking elderly investors of $11 million

Jan. 4, 2010

Updated Aug. 21, 2013 1:17 p.m.

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Jeffrey Gordon Butler keeps his head down as he and his wife, Peggy Warmath Butler, convicted of bilking$11 million from 123 elderly investors, waits for victim impact statements during the sentencing phase of their trial in Santa Ana last month. SAM GANGWER, THE ORANGE COUNTY REGISTER

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Peggy Warmath Butler, right, hides behind her hair as she and her husband, Jeffrey Gordon Butler await victim impact statements during the sentencing phase of their trial last month. The pair were convicted of stealing $11 million from 123 elderly. SAM GANGWER, THE ORANGE COUNTY REGISTER

Jeffrey Gordon Butler keeps his head down as he and his wife, Peggy Warmath Butler, convicted of bilking$11 million from 123 elderly investors, waits for victim impact statements during the sentencing phase of their trial in Santa Ana last month. SAM GANGWER, THE ORANGE COUNTY REGISTER

SANTA ANA – A San Juan Capistrano man convicted last year of bilking 124 elderly investors of more than $11 million in a Ponzi scheme was sentenced to 90 years and eight months in prison today.

Jeffrey Gordon Butler, 51, was convicted in June of 694 felony counts of stealing from elderly investors through the illegal sale of unqualified securities and filing false tax returns.

The case is one of the largest elder-abuse cases ever prosecuted in the history of the Orange County District Attorney's Office.

The final sentence – handed down over a period of days by Superior Court Judge James A. Stotler – likely means that Butler will not live long enough to become eligible for parole.

Stotler later sentenced Butler's wife, Peggy Warmath Butler, 49, to one year in jail, to be served during seven years probation on her convictions of aiding another in the preparation of a false tax return and three counts of filing false tax returns. Stotler warned her that if she could be sent to prison later if she violates any conditions of probation.

The judge sentenced Jeffrey Butler to consecutive terms in prison on dozens of counts after he heard emotional victim-impact statements last month from victims who said they lost most of their retirement savings to a man they had trusted.

"I've never known a man who can look you straight in the eye and lie," victim Larry Schiel told the judge. "He didn't show any compassion for his victims or what they've been through."

Jake Yessian, 91, who lost more than $80,000, said on a videotape that he had had to cut back on food and can't take vacations.

"I'm just tired of it. I can't take it any longer, and I don't think I'm ever going to get my money back," Yessian said. "They should put him away for good. Throw the key away."

Jose Ruano, 78, of Fallbrook, said he and his wife, Hisako, lost more than $250,000. "It was a terrible mistake I made by trusting Mr. Butler with our savings," Ruano said. "All of our savings are gone forever."

Deputy District Attorney William Overtoom argued Butler gained the trust of his senior-citizen clients by preparing their wills and trusts before he lured them into giving him their retirement funds by promising investment returns of up to 12 percent annually.

But Butler then stole the money – about $11.4 million – through a classic Ponzi scheme, Overtoom said. In a Ponzi scheme, money paid in by later investors is used to pay returns to earlier investors.

Defense attorney Ken Chinn argued there was no Ponzi scheme and that Butler had acted in good faith.

Jurors disagreed with Chinn after an eight-month trial – one of the longest in Orange County history – and convicted Butler of nearly 700 felony counts. The jury also found him not guilty on 34 counts and deadlocked on about 80 counts.

When he had a chance to speak to the judge in December, Butler said, "The tragedy is the loss of their money. I never intentionally set out to hurt them. I didn't steal their money. These are great people, and I accept the consequences."

Overtoom said the case was about "fraud, deceit and lies. ... The part I think is most important is who he was targeting each and every time."

Stotler, who said "the jury got it right," also scheduled a restitution hearing for Jan. 29, but added he did not think Butler had any money left to repay the investors.

Jeffrey Butler had been at Men's Central Jail since being arrested at his home in February 2006. Peggy Butler was released after posting $150,000 bail.

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